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The Diocese of Duluth, Minn., is seeking an extension to file reorganization plans in its bankruptcy case as representatives prepare for more settlement talks with victims of child sexual abuse, the Duluth News Tribune reported today. The diocese and a court-appointed creditors committee met for a "productive," two-day mediation session last month in Minneapolis, and they're planning to return to the table for additional discussions during the week of Nov. 14, diocese attorneys said. "The parties are optimistic that a global resolution will be reached by the close of the November session," attorneys Bruce Anderson and Phillip Kunkel wrote in the motion. The motion asks Bankruptcy Judge Robert Kressel to extend a deadline for the diocese to file a proposal to regain control of its finances and repay creditors. That plan is currently due Sept. 1, but attorneys are asking for it to be pushed back to March 17.

A Texas judge has thrown out a lawsuit against General Motors from a woman who blamed a 2012 car crash on a faulty ignition switch that later prompted the company to recall 2.6 million vehicles, Reuters reported yesterday. The Aug. 13 order from Judge Robert Schaffer in Harris County, Texas, came in a 2013 case brought by Gloria Alexander that the automaker had selected as the second test trial amid 20 similar cases in that state court over the ignition switch. The first bellwether trial, picked by plaintiffs' lawyers, began last week. That case involves a man who had faced criminal charges in connection with a fatal accident he blamed on the ignition switch. GM had argued that Alexander's case had no expert testimony to support allegations the defective switch caused her 2007 Chevrolet Cobalt to veer out of control and strike a concrete barrier before being hit by a pickup truck. Read more. 

Don’t miss the Great Debate at ABI’s Views from the Bench conference on Oct. 7, as Judge Robert Gerber (ret.) & Goodwin Procter's William Weintraub debate whether §363 sales lawfully should be free and clear of successor-liability claims. Click here to register! 

General Motors Co. sought a rehearing of an appeals court ruling that exposes it to hundreds of potential lawsuits and some $10 billion in liabilities from faulty ignition switches, the Wall Street Journal reported today. Lawyers for the nation’s largest auto maker on Wednesday said that the court made two “fundamental errors” when it last month ruled against the company’s efforts to use its 2009 bankruptcy to shield itself from the litigation over the ignition switches. GM said the court’s decision, if not reversed, would permanently damage the bankruptcy process that saved it from collapse in 2009. The U.S. Court of Appeals for the Second Circuit last month denied GM’s attempt to use its bankruptcy to block lawsuits seeking potential claims over the defective ignition switches, which have been linked to 124 deaths. The ruling overturned a bankruptcy judge’s earlier decision to bar claims that arose before its chapter 11 filing. Read more. (Subscription required.) 

Don’t miss the Great Debate at ABI’s Views from the Bench conference on Oct. 7, as Judge Robert Gerber (ret.) & Goodwin Procter's William Weintraub debate whether §363 sales should lawfully be free and clear of successor-liability claims. Click here to register! 

Rincon Island LP, an oil and gas production company, has filed for bankruptcy protection to block the state of California from forcing the company to perform extensive remediation on its wells amid environmental concerns, the Wall Street Journal reported today. The company filed for chapter 11 protection on Monday with the U.S. Bankruptcy Court in Dallas as California’s Natural Resources Agency issued an emergency order mandating the environmental safety work on Rincon Island’s idle properties, including installing plugs and shut-off valves on certain wells. The order requires Rincon to pay for the extensive remediation. The report prompted a call from state Sen. Hannah-Beth Jackson urging California to close the facility completely. She cited the lack of progress Rincon Island has made to address safety troubles. “Despite being warned of this and other issues on Rincon Island on numerous occasions — including deteriorated wellheads and a lack of regular maintenance — RILP has consistently failed to meet milestones,” Sen. Jackson said in her letter. Rincon Island said in a statement that it filed for bankruptcy “in order to protect its key oil and gas leases from a wrongful attempted termination by the state of California. The partnership will be reorganized in order to ensure its long-term financial success.” Read more. (Subscription required.)

Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt. Order your copy of ABI's revised and expanded When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, Second Edition. 

A leading federal regulator said yesterday that states should force coal companies to set aside collateral to pay for future mine cleanups and protect taxpayers as the industry braces for further declines, Reuters reported. Three of the largest U.S. coal producers, Peabody Energy, Arch Coal and Alpha Natural Resources, have filed for bankruptcy in the past year in an industry shaken by cheap natural gas and falling demand from China. With coal production outstripping demand, the market is not likely to recover until at least 2021, Joe Pizarchik, who heads the Office of Surface Mining and Reclamation Enforcement, told Reuters. Pizarchik's forecast is based on recent data from the U.S. Energy Information Administration that shows continued declines in capacity for coal-fired power plants for the next five years. This has raised concerns because the three bankrupt coal producers have not set aside cash to pay for roughly $2 billion in projected mine cleanups. Instead, they used a federal subsidy known as "self-bonding," which essentially exempts healthy companies from posting bonds or other securities to cover the cost of returning mined land to its natural setting. "We're moving as quickly as we can to help the states do their best to protect the taxpayers," Pizarchik said. "We want to give them the tools to ensure that mined land is reclaimed."

Criminal prosecutors in Minnesota won a rare admission of wrongdoing from the Archdiocese of St. Paul and Minneapolis, which conceded it protected a priest who was later convicted of sexually abusing children, the Wall Street Journal reported today. The deal announced yesterday resolves criminal charges against the archdiocese alleging it failed to take actions to safeguard children well after U.S. bishops instituted a new, strict abuse policy in 2002. As part of the deal, the archdiocese acknowledged that it failed to adequately respond to and prevent the abuse of three children, and that it put its own interests and the interests of an abusive priest, Curtis Wehmeyer, ahead of the safety of those children. It is unclear how yesterday’s admission will affect the Twin Cities archdiocese, but legal experts say that for dioceses in bankruptcy in general, admitted criminal activity can complicate potential insurance recovery because intentional or criminal actions are typically excluded by insurance policies.

A federal appeals court yesterday revived Ohio's lawsuit accusing Freddie Mac of defrauding the state's $87.3 billion public pension fund by hiding its exposure to subprime and other risky mortgages prior to the 2007-09 financial crisis, Reuters reported. The U.S. Court of Appeals for the Sixth Circuit said that a lower court judge erred in finding that the Ohio Public Employees Retirement System (OPERS) did not plausibly allege that disclosure shortfalls by Freddie Mac and officials, including former Chief Executive Richard Syron, caused it to lose money on the company's stock. Freddie Mac and the larger Fannie Mae were seized by the U.S. government in September 2008 after racking up huge losses from mortgage securities. They have since regained profitability, but remain in a federal conservatorship and send profits to the U.S. Treasury Department. In its lawsuit, which began in January 2008, OPERS accused Freddie Mac of concealing nearly $227 billion in exposure it had taken on to subprime and other low-quality loans, as well as its ability to manage risk and fight fraud. The fund said Freddie Mac's stock price plunged 29 percent in one day after the truth became known in November 2007. OPERS sought class action status on behalf of purchases of Freddie Mac stock from Aug. 1, 2006, to Nov. 20, 2007.

When a federal judge approved Alpha Natural Resources’ bankruptcy exit plan two weeks ago, regulators, industry leaders and environmentalists breathed a collective sigh of relief, but while the plan will keep two large coal mines operating and set the stage for a stricter approach to self-bonding, the long-term outlook for Alpha is murkier, the Casper (Wyo.) Star Tribune reported today. Alpha was the first of three large coal companies operating in Wyoming to file for bankruptcy amid one of the most difficult years for coal in three decades. Arch Coal, which operates the Black Thunder Mine, and Peabody Energy, which runs the North Antelope Rochelle Mine, soon followed. But as the first company to reach a restructuring agreement with regulators and the courts, Alpha is expected to set a precedent for the other companies. Environmentalist hope Alpha’s plan will change the state’s approach to environmental bonding. State regulators want pragmatic deals that preserve Wyoming jobs. However, in a bearish market with hesitant lenders and federal oversight, widespread uncertainty remains about the viability of Alpha’s financial plan post-bankruptcy.

A federal judge on Friday dismissed a swathe of customer claims in the nationwide litigation over General Motors Co.’s deadly ignition switch defect that triggered the recall of millions of vehicles two years ago, Bloomberg News reported. Friday’s ruling by a Manhattan federal judge comes two days after an appeals court dealt GM a blow by reviving hundreds of related cases that had been blocked by the carmaker’s 2009 trip through bankruptcy court. GM’s shifting fortunes in the case come as the Detroit-based company prepares for a third test trial over the flaw, set to start in September. GM won the first two. U.S. District Judge Jesse Furman, who has been managing hundreds of consolidated cases and is overseeing a series of test trials, targeted one of the plaintiffs’ key claims — that customers deserve financial compensation due to the reduction in resale value of the vehicles caused by damage to GM’s reputation and brand. The lawyers have argued those claims are worth as much as $10 billion, though GM disputes that figure. "The court finds that that novel theory of damages is unsound in light of persuasive precedent interpreting consumer protection law," Furman said. Furman also rejected plaintiffs’ allegations under the Racketeer Influenced and Corrupt Organizations Act, saying the claims of a coverup “fail to allege the existence of an ‘enterprise’ within the meaning” of the statute. Read more. 

Read ABI Editor-at-Large Bill Rochelle’s analysis of the Second Circuit’s decision on July 13. 

Don’t miss the Great Debate at ABI’s Views from the Bench conference on Oct. 7, as Judge Robert Gerber (ret.) & Goodwin Procter's William Weintraub debate whether §363 sales lawfully be free and clear of successor-liability claims. Click here to register!

Don’t miss the Great Debate at ABI’s Views from the Bench conference on Oct. 7, as Judge Robert Gerber (ret.) & Goodwin Procter's William Weintraub debate whether §363 sales lawfully be free and clear of successor-liability claims. The early bird rate expires on Friday, so please register here!